Lenovo completes JV deal with NEC

Lenovo Group, China’s largest PC maker, announced Monday the launch of a joint venture with Japanese PC maker NEC Corp. Lenovo hopes to gain a firm foothold in the Japanese market. 

The new JV, called NEC Lenovo Japan Group, consists of three parts – Lenovo NEC Holdings B.V., which was founded Friday, and two wholly owned subsidiaries, NEC Personal Computers and Lenovo Japan – the two sides said in a joint statement released Monday,

The new group will become Japan’s largest PC vendor, holding a share of roughly 25 percent of the market, according to market research firm International Data Corporation (IDC).

Lenovo holds 51 percent of the JV, with NEC holding the rest. NEC has received Lenovo shares worth $175 million, in line with plans announced in January, when the two firms unveiled the proposed tie-up. 

Both Lenovo and NEC will be maintained as distinct brands and will continue to sell their products via their existing sales networks, said the joint statement. 

Analysts said teaming up with NEC would play an important role in Lenovo’s global expansion plan.

“To gain a firm foothold in the Japanese market is important, as Lenovo is competing with Acer to take a larger share in the global market,” said Hu Haoyong, consulting director of research firm Frost & Sullivan in Shanghai. 

Lenovo is currently the world’s fourth-largest PC maker, trailing Hewlett Packard, Acer and Dell, according to IDC.
NEC, the top PC maker in Japan, with a market share of around 20 percent, is a good choice for Lenovo, Hu said.
“The best way to get into mature markets like Japan is through purchasing established brands out there,” said Wang Jiping, senior research manager of IDC China computing system in Beijing. 

The PC industry will see several major players monopolizing the market via acquiring smaller rivals, Frost & Sullivan’s Hu believes. 

There are, however, some obstacles that may hinder Lenovo’s partnership with NEC, Hu pointed out, including the fact that both sides already have original equipment manufacturing units in Japan, and their sales channels remain separate from each other. 

Lenovo also announced in early June that it agreed to acquire German consumer electronics retailer Medion AG in a deal worth $900 million, its biggest acquisition since buying IBM’s PC unit several years ago.

Source: Global Times

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